Medicare drug benefit offers relief, confusion

Sep. 26--The mailboxes of Medicare's 42 million beneficiaries will begin to bulge next week.

That's when seniors will start to receive sales brochures from insurers, pharmacies, pharmaceutical companies and others marketing prescription drug plans.

Medicare's new prescription drug benefit represents the most significant change in the federal program's 40-year history.

Yet, many older adults don't understand the new program, or they worry they won't come out ahead if they enroll in a drug plan.

"Whenever there's change, there's confusion and anxiety," says Khelan Bhatia, an advocate for AARP Texas. "But there's also opportunity."

Medicare administrator Mark McClellan expects the new drug benefit will cut many older Americans' prescription costs in half. And seniors with limited income and few resources will have almost no drug expenses.

The new benefit will come as welcome relief for many, he says. The average prices of dozens of prescription drugs used widely by seniors are rising more than twice as fast as general inflation, according to AARP.

"This coverage will help seniors afford the drugs they need to maintain or recover their good health," Dr. McClellan says.

JoAnn Walters, 78, of Dallas takes four prescriptions but doesn't know what she'll do.

"I have no idea whether the coverage would save me any money today, but you never know what your future will bring," she says.

Like other Medicare beneficiaries, Ms. Walters says she'll compare the drug plans to see if she can reduce her prescription costs.

"I've got some homework to do."

Here are some of the most frequently asked questions about the drug benefit, according to Medicare officials and others who work with seniors.

Must I enroll?

The benefit is voluntary. It's available to anyone on Medicare, regardless of health or income. But if you want the coverage, you'll have to enroll in one of the private insurance plans Medicare has approved.

Senior advocates add this cautionary note: If you wait and sign up for the drug benefit after the initial enrollment period ends May 15, you'll pay a penalty -- an extra 1 percent in premiums for each month you delay.

"Even if you're healthy, you may want to get the coverage now," says Paul Zobisch, a Medicare volunteer. "You'd be insuring against what might happen later."

What if I already have prescription drug coverage?

Companies that provide retiree drug benefits will notify you whether their plans are at least as good as Medicare's.

If you have such coverage, you may want to keep it, says Robert Hayes, president of the Medicare Rights Center, a consumer group. As long as it's comparable to Medicare's benefits, you won't pay a penalty if you switch to Medicare later.

Medigap supplemental insurance policies are another story. Most that do cover prescriptions aren't as good as Medicare's coverage, so you'll pay a penalty if you enroll in a Medicare drug plan later, Mr. Hayes says.

"It's important to remember that Medicare's drug discount cards are ending, so you won't be able to rely on those any more," Mr. Bhatia says.

What will the drug benefit cost, and what will I get in return?

Your costs will depend on the plan you choose. Competition is driving premiums down -- to less than $20 a month for some plans, from the $37 once projected.

After you pay the first $250 of your annual drug expenses, you'll be responsible for 25 percent of the next $2,000 in bills, all of the next $2,850, and 5 percent beyond that.

Some plans will offer more coverage for higher premiums, says Rod Clark, Medicare's outreach coordinator in Dallas.

Each plan will have its own list of covered drugs, both brand name and generic. Dr. McClellan assures seniors that every medically necessary drug must be covered.

Is extra help available for people with low incomes?

Yes. If your annual income is less than $14,355 and your assets are below $11,500, Medicare will pay almost all of your drug bills. (For couples, income can't be more than $19,245 and assets can't exceed $23,000.) If your income is slightly higher, you'll get a smaller break on your premiums, deductibles and co-payments.

If you now get Medicaid, a Medicare Savings Program subsidy or Supplemental Security Income, you automatically qualify for the additional help. Others on limited incomes will have to apply for it through Social Security.

"This is a no-brainer for anyone who thinks he qualifies," Mr. Hayes said says. "Run, don't walk, to apply."

But keep in mind that requesting the extra help won't enroll you in a plan, he says. You'll still need to select one.

Once I decide on the drug coverage, how do I find the best plan for me?

Texans will select from among 20 plans.

"Having so many choices is a good thing, but it can also be overwhelming," Mr. Zobisch says. "So take it a step at a time."

First, find a plan that covers all or most of your prescriptions.

If the plan you're considering doesn't cover one of your drugs, talk to your doctor to see if your medicine can be switched to one in the plan, AARP suggests.

If not, talk to the plan's sponsor to see if your circumstances make you eligible for an exception that pays for a drug not on the list.

Next, identify a plan that works with a pharmacy near your home. You may also be able to order drugs through the mail.

Finally, make sure you can afford the out-of-pocket expenses.

"Consider your choices carefully, because you generally won't be allowed to change plans for a year," Mr. Bhatia says.

How can I compare plans and enroll in one?

Medicare's Web site will let you compare drug plans' costs and benefits, beginning in mid-October. Visit www.medicare.gov and select the "search tools" option.

You may also call Medicare at 1-800-633-4227. When you do, have at hand your Medicare card, a list of the drugs you take and the name of your pharmacy.

The Medicare & You 2006 handbook will be mailed to every Medicare household in October and will also have a detailed listing of the plans in your area, Mr. Clark says.

Once you decide, you may sign up at Medicare's Web site or through its toll-free number. Or you may directly contact the plan you've chosen.

"Don't rush to judgment," Mr. Bhatia said says. "Even when enrollment begins Nov. 15, you'll still have six months to reach a decision. Consult a family member or trusted friend to help you consider your options."

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